New land bill will win, not lose votes for Modi

Rahul Gandhi wants to escalate the suicide of a farmer at a Delhi AAP rally into a national election issue, painting Modi as pro-industrialist and anti-farmer. Mamata Banerjee leveraged resentment against land acquisition in Singur and Nandigram to unseat the Marxist government in West Bengal. Can Rahul do something similar?

Some BJP stalwarts want to dilute the new land acquisition bill to win over enough opposition parties to ensure success in the Rajya Sabha. But hardliners call this submitting to blackmail on an issue that can, with proper communication, place the BJP on the moral high ground. They would rather risk defeat in the Rajya Sabha, and then clear the bill in a joint session of Parliament, where the NDA has a majority.

The hardliners are right. The analogy with Singur is false. The new bill will gain votes, not lose them in the 2019 election. The 2013 land acquisition act of the Congress had so many onerous clauses that acquisition (and related projects) came to a virtual halt across India. Economic growth and job creation crashed, so voters turned against Congress with a vengeance. Its supposedly pro-farmer measure boomeranged.

Modi has raised high job hopes. He cannot get re-elected without fast economic growth that creates jobs and business opportunities galore. For this, he must change the 2013 law to ensure smooth, speedy acquisition for government infrastructure and industrial corridors. Without that, the economy will not accelerate, and voter resentment at slow growth will far exceed any anger over cases of faulty acquisition.

Besides, faulty acquisition typically hits the electoral fortunes of chief ministers, not New Delhi. Maybe 90% of rural Indians have never met a central government official. Those they know — the police, revenue and administrative staff, canal and electricity staff — are all state officials. Even New Delhi’s programmes are implemented by state officials. So, if implementation is good, voters applaud the chief minister, not New Delhi. Similarly, bad implementation sinks the CM, not the PM.

The Congress claimed that its farm loan waiver and MGNREGA (its rural job scheme) won it the 2009 election. Really? Congress won only nine of 72 seats in three very poor states where these schemes should have helped most — Bihar, Chhattisgarh and Odisha. Seminal research by Poonam Gupta and Arvind Panagariya shows that voter behaviour in 2009 was explained overwhelmingly by the acceleration or deceleration of economic performance in a state, not doles or write-offs.

State GDP growth shot up between 2000-04 and 2004-09 from 4.5% per year to 12.4 % in Bihar, from 4.8% to 10.2% in Odisha, and from 6.1% to 9.7% in Chhattisgarh. Despite big overall Congress gains, voters in each of these non-Congress states voted overwhelmingly for their CM’s party. By contrast, the Congress gained 42 seats in opposition-ruled states where economic growth had not accelerated — UP, MP, Rajasthan and Punjab.

Examining state GDP growth between 2004-05 and 2008-09, Gupta and Panagariya divided the major states into three growth categories — high, medium and low (relative to national growth). In high-growth states, a whopping 85% of candidates of the incumbent state party won in 2009.

The winning rate dropped to 50% in medium-growth states and 30% in low-growth states. Clearly, fast growth mattered most of all, though other factors (alliances, caste, regional pride, inflation) remained relevant. Rahul Gandhi can pretend that fast growth benefits only a few rich industrialists, but India’s high-growth era lifted a record 138 million out of poverty between 2004-05 and 2011-12. Fast growth reflected good governance — less thuggery, corruption and leakages — and hence more satisfied voters.

In 2014, Rahul hoped to win mass votes through the food security act, promising wheat and rice at Rs 2-3/kilo for two-thirds of the population. This failed, mainly because implementation depended on state governments. Besides, many state governments already provided food at Rs 1-2/kilo, so Rahul’s reduction of the central price merely subsidized the state governments, not consumers.

Some elections are won by a popular wave, as in 1984 and 2014. Gupta and Panagariya’s fast-growth thesis does not apply to such elections. But nobody expects a fresh Modi wave, or Rahul wave, in 2019. So, the performance of chief ministers will once again be critical.

What does this imply for the land acquisition bill? All land acquisition is done by state governments. Farmers whose land is acquired will be happy or angry depending on the honesty and sensitivity of acquiring state government officials. Congress-ruled states can add the extra onerous conditions Rahul swears by — this will stall projects and ensure Congress’ defeat in these states at the next election. Modi has nothing to fear, and much to gain.